Default Rates for Mortgages, Auto Loans Fall in April

Default rates for first and second mortgages and auto loans declined in April from March, although they rose for the third month in a row for bank cards, according to the latest data from Standard & Poor's Ratings Services and Experian PLC.

The defaulting balances of bank-card loans were 9.1% in April, up from 8.9% in March and 7.7% a year earlier. First and second mortgage default rates were 3.7% and 2.5%, respectively, both down from March. Auto loan defaults were 1.9%, dropping from 2.4%.

David Blitzer, chairman of the index committee at S&P Indices, said consumer defaults for mortgages and auto loans bottomed out around the same time as the stock market in early 2009. Bank cards, on the other hand, continue to worsen and are at levels not seen in the history of S&P's indices.

"With attention focused on consumer spending and little hope for a fast rebound in housing, the bank card series may raise concerns for many consumer related businesses as well as for consumer oriented lending institutions," Blitzer said.

Consumer-credit defaults varied across major cities and regions in the U.S., with Chicago showing the smallest decline in the past year among the five metropolitan areas included each month in the data. Sharper declines were seen in Los Angeles and Miami, reflecting a somewhat more stable, though still weak, housing market as well as some economic improvements.